Cerberus spin-out Tenex nears final close

The Michael Green-led firm is expected to hit its hard-cap of $425m for its debut fund, which has shrugged off the stagnant fundraising market and the hesitancy of LPs to back new firms.

Tenex Capital Management, a spin-out from Cerberus Capital Management, is nearing final close on its debut fund and is expected to hit its hard-cap of $425 million.

The fund could reach final close later this month or in early August. Tenex did not return a call for comment. Atlantic-Pacific Capital is working as the global placement agent for the fundraising and also declined to comment.

Tenex, headed by former Cerberus executive Michael Green, focuses on investing in distressed situations in the mid-market in North America. The fund will make investments of between $25 million and $75 million in Canada and the US. Tenex will target a return of 2.5x and a gross internal rate of return of 25 percent.

Members of the Tenex team will take on operational roles in portfolio companies.

Michael
Green

“The firm seeks to limit investment risk and create upside opportunities by targeting companies with few, if any, competing bidders and can be acquired at values that reflect operational uncertainty and market illiquidity,” according to a staff memo from the New Jersey Treasury department. New Jersey committed $50 million to the fund last year.

Tenex has had an especially successful fundraising considering the firm is new and limited partners in today’s environment are reluctant to back fledgling teams. However, Tenex’s professionals have worked together in the past.

“While this is a first time fund, the team is comprised of individuals who have considerable tenure and experience working together and executing the defined strategy,” the New Jersey Treasury memo said.

Joining Green are other former Cerberus senior executives, including Varun Bedi, a former senior vice president, and former Cerberus senior operations leaders Chad Spooner, Joe Cottone and JP Bretl.

One LP in the fund told Private Equity International that the investment team was one of the most impressive they had ever talked to.

The firm is charging a 2 percent management fee, which the LP said was justified because the team is new and needs to fund operations.

Tenex also is giving back 100 percent of any deal fees to LP to offset the management fee, and the GP is contributing 3 percent of capital commitments, according to New Jersey pension documents.